KLM Royal Dutch Airlines
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- KLM Royal Dutch Airlines
P.O. Box 7700
1117 ZL Schiphol
- Main hub
- Amsterdam Schiphol Airport
- Business model
- Full Service Carrier
- Domestic | International
- Airline Group
- Part of Air France-KLM S.A.
- Joined Alliance
- Association Membership
- Codeshare Partners
- Aer Lingus
Air Europa Lineas Aereas
China Eastern Airlines
China Southern Airlines
CSA Czech Airlines
Delta Air Lines
Rossiya - Russian Airlines
Ukraine International Airlines
Based in Amsterdam, KLM is the national airline of the Netherlands. Part of the Air France-KLM Group, KLM operates an extensive network which includes services within Europe and to Asia, Africa, North America, Central and South America and the Middle East. KLM is a founding member of the SkyTeam alliance.
Location of KLM Royal Dutch Airlines main hub (Amsterdam Schiphol Airport)
2,117 total articles
199 total articles
It was never a question of if Etihad Airways would report revenue growth in 1H2014; the only question was the exact double-digit percentage by which it would grow. Etihad reports group revenue increased by 28%, a remarkable figure even by fast-paced Gulf standards, and one that stole most headlines. But total revenue has also been positively impacted by Etihad's acquisition of ground-based services.
Passenger revenue grew by a "slower" 14% – below the 19% increase in ASKs, although probably not all that remarkable in the short term with this rate of expansion. Yields, load factor and RPKs (in addition to profit figures) were not disclosed. Possible slowing of momentum comes as Air France-KLM and the Lufthansa Group in a letter to the European Commission accused all Gulf carriers of "excessive growth".
Etihad's acquisition of ground services has clearly helped add diversification to the model, with passenger revenue now comprising only 64% of total group revenue, lower than at Emirates or Lufthansa. Partner revenues are likely to surpass USD1 billion in 2014, but the more significant figure is 1H2014 partner revenue accounting for 23% of total passenger revenue. This too will grow as new partnerships – including major ones with Jet Airways and Alitalia – bed down. Putting planes into the sky is relatively easy; selling their seats is the challenge.
Leaving aside the controversy, Etihad is creating a remarkable new model that continues to grow multi-dimensionally in ways that detractors might be wise to concentrate on – rather than merely accelerating their efforts to rescind change.
A couple of months after acquiring regional airline CityJet from Air France-KLM, new owner Intro Aviation faces a crucial decision about replacing CityJet's fleet of ageing BAE regional jets. This is likely to provide the key to turning around the heavily loss-making airline, whose main base is at London City. In spite of this being a high yield market from which to operate, and in spite of capacity cuts, the final years under Air France-KLM ownership were characterised by weakening unit revenues.
Decisions about rebuilding the network in a manner better suited to CityJet's market, and better able to bolster unit revenues, will depend to a great extent on its final choice of aircraft.
Moreover, the fleet choice should also have a considerable bearing on unit costs in the future. With three manufacturers in the running (Bombardier, Embraer and Sukhoi), the airline may shortly be able to provide a clearer view of how its negotiations are progressing.
The North Atlantic and Europe are suffering a fall in their share of world premium traffic revenues. Moreover, the North Atlantic market has consolidated in recent years, to be dominated by the immunised joint ventures within the three global alliances (plus the new Delta-Virgin Atlantic JV).
So why are two new European all-business class transatlantic services currently planning to enter this market? It may be possible for a differentiated product, tapping into a defensible and large enough sector of this market, to succeed if its business plan is well devised and well executed. However, history is not attractive for a new entrant and previous attempts, before the global financial crisis, saw the rise and fall of Eos Airlines, MAXjet, Sliverjet and L'Avion.
In this first of two reports, we review the defunct all-business class transatlantic airlines and the all-business class services of existing network carriers. We also look at the business model proposed by Dreamjet, which plans to operate between Paris and New York this year. In part two, we will consider Odyssey Airlines, which plans to start up from London City to New York in 2016.
Brazil’s Gol is continuing to expand into international markets as demand in the country’s domestic market remains tenuous, driven by uncertain economic conditions.
GOL Linhas Aéreas Inteligentes (Gols') international diversification began a little over a year ago as it opted to return to the US market through stop-over flights in Santo Domingo, and the airline continues evaluations of establishing an official hub at the airport. In the meantime Gol is adding new flights from rival Azul’s base at Campinas Viracopos to Miami in Jul-2014. Gol is expanding its one-stop offerings to the US ahead of ambitious plans by Azul to introduce new service to the US in 2015 with Airbus widebodies.
International expansion and other measures Gol has taken to improve its financial performance resulted in some progress during 1Q2014, but the airline still posted an overall loss, driven by currency fluctuations and financing expense.
While China is sometimes seen a promised land with endless growth for aviation, it is a divergent story. Beijing Capital Airport grew passenger volumes by only 2.2% in 2013 compared to 3.4% at London Heathrow, the much-bemoaned constrained airport. The eastern coastal part of China accounts for the majority of travel, with 70% of 2013's 754 million passengers flying in the region. But this share is gradually falling; in 2006 73.2% of passengers flew in the eastern regions.
It is western provinces and the northeast that are taking market share, albeit slowly. It is these provinces that are seeing rising GDP and are home to some of China's fastest growing airports, such as Guiyang and Kunming. While the growth presents opportunities for domestic and foreign airlines, it presents challenges as flights are often not profitable. KLM's extensive secondary airport network in China is not profitable and the carrier does not see short-term changes. West Air, based in Chongqing, is transitioning to a LCC model in the hope that a leaner cost base makes it more sustainable. Airports often put out subsidies, effectively buying growth.
Air France-KLM made further progress with its Transform 2015 restructuring programme in 1Q2014 and saw its losses narrow. However, while unit costs fell, unit revenue weakness is a concern and LCC subsidiary Transavia's losses widened. In addition, cargo continues to provide headaches for management and a further restructuring, focusing on the use of freighter aircraft, has been announced.
The first quarter is typically weak for European airlines and underlying trends were blurred by the shift in the timing of Easter, so these results may not tell us much about the group's full year prospects. Air France-KLM is sticking to its financial targets for now.
However, Venezuela's recent currency devaluation, and Air France-KLM's consequent network adjustments, are a reminder that the airline industry is often subject to unexpected developments. Unless there is some contingency in the targets, there is a sense of anxiety that the next change in them will be to lower them.
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